Current Market Prices
Crude Oil
July 2023 NYMEX contracts rolled off the board at $70.50/bbl, losing $1.28 on its final day of trading (Tuesday). The new prompt month contract, August 2023, was $1.34 higher on its first day of trading, settling at $72.53/bbl. However early trading today has given back all of yesterday’s gain and then some, currently down more than $2/bbl to $70.45 as U.S. Fed Chair Jerome Powell told Congress late yesterday that additional interest rate hikes would be needed in the back half of 2023 to further tighten inflation. His testimony continues today so additional negative sentiment could push prices even lower. Despite the interest rate news, there’s numerous factors that support prices well above what they are currently trading at - more than a million bpd of OPEC oil cuts, record imports to China, very high refinery funs rates and a bullish outlook for air travel. EIA also released crude inventory numbers this morning, indicating a 3.8mm bbl draw.
www.eia.gov/petroleum/supply/weekly
Rig Count
The overall U.S. rig count had a significant 27 rig drop compared to the prior week, with the bulk of the loss coming on the oil side - down 22 to 606 while gas rigs fell five to 138. The SCOOP+STACK took the crown for this biggest loser, laying down seven rigs with 35 remaining active. This is the sixth straight week the rig count has dropped and since the start of 2023, there are 122 less active rigs with nearly half coming in the last 6 week stretch.
Natural Gas
Natural Gas made its way back to the bulls earlier this week as futures closed in on $2.70. With the latest heat wave making its way to the southern plains, Texas spot prices hit a 3-month high amid record AC demand. The excessive heat warnings boosted demand and drove Henry Hub prices up nearly 11%, the highest settlement since early March. Prices have maintained the $2.60 range most of the week as the longer-term forecast looks to move the heat to the western states. Also worth noting, European demand is on the rise, early hurricane activity is being monitored in the Atlantic and power generation continues to shift from coal to natural gas. Look for August futures to continue riding the heat wave as the market tries to stay with the bulls.
Natural gas spot prices have fallen in the Midcon, despite an increase in demand. Chicago city-gates spot prices were down $.10 to $2.15/MMBtu while NGPL was down $.10 to $2.10/MMBtu. In the futures market, Chicago city-gates is up $.01 to $.28 discount to Henry Hub while ANR OK and NGPL Midcon are $.22 and $.25 back. Total demand in the Midcon was forecasted to hit 13.21 Bcf/d, an increase of 621 MMcf/d. In the Midcon producing region, residential-commercial demand was expected to reach 1.83 Bcf/d with power demand reaching 1.54 Bcf/d, according to S&P Global Commodity Insights data. Additionally, net flows in the producing region are up 500 MMcf/d when compared to month-to-date flows from last year.
The EIA released storage numbers this morning, coming in at 2,729 Bcf, representing a net +95 Bcf increase from the previous week. This increase was slightly more than marketplace expectations of +90 Bcf increase. Stocks were 571 Bcf less this time last year and come in 362 Bcf above the 5 yr. historical range of 2,367 Bcf.
Natural Gas Liquids
Ethane and Propane in Mont Belvieu were both up 7% and 4%, respectively, with all other products dead flat compared to same period a week ago. Ethane in Conway showed the largest percentage gain on the week, adding 11% while Natural Gasolines picked up a 7% gain. Isobutane dropped 5%.
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